Mid-market retailers poised for high growth in Hong Kong

17 Sep '15

4 min read

In the past decade, the percentage of retail sales contributed by tourists doubled from 20 per cent in 2004 to 42 per cent as of 2015. This accounted for the tremendous sales growth in tourist-oriented products, including cosmetics, jewelry and watches as well as electronic goods. Some of these retailers have not only grown in number of shops but also the average size of their retail premises. Since 2014, Hong Kong has seen a decline in tourist arrivals from the mainland, and changes in tourist spending patterns from luxury to mid-range goods.

Local real private consumption expenditure registered an average annual growth of 4.9 per cent between 2004 and 2014, and the median household income rose by 4 per cent per annum during this period. Domestic consumption is set to remain healthy in the short to medium term.

The lack of supply in the market is another reason for pushing retail rents to a high in past years. CBRE believes that supply in the next five years will ease some pressure on retailers on rental expense but new options in the core shopping districts will continue to remain limited. The development of several new towns in more remote districts will result in substantial growth in residential and working populations that will need to be served with by shopping facilities.

CBRE estimates that in the next five years, 70 per cent of the new supply will be in non-core districts and 5.6 million sq. ft. of retail space will be shopping arcades for residential estates. This will provide opportunities for mid-range retailers to expand their store networks targeting the mid-to-high income households. (SH)

Fibre2Fashion News Desk – India